For immediate release

The Federal Reserve Board today announced that it has adopted a revised Policy Statement on Privately Operated Multilateral Settlement Systems. The statement updates and integrates the Board's risk management policies for Privately Operated Large-Dollar Multilateral Netting Systems and Private Small-Dollar Clearing and Settlement Systems into a single, comprehensive policy statement. The revised policy statement is effective January 4, 1999. The policy statement will apply to privately operated multilateral settlement systems that are expected to settle transactions with an aggregate gross value of $5 billion or more on any day during a rolling twelve month period. The policy statement will apply to systems or arrangements for the settlement of checks, automated clearing house (ACH) transfers, credit, debit, and other card transactions, large-value interbank transfers, or foreign exchange contracts involving the U.S. dollar. However, only a few of these systems currently settle transactions with a gross daily aggregate value in excess of $5 billion, and thus will be subject to the requirements of the policy at this time. The systems that are covered by the policy statement will be required to address the credit, liquidity, operational, and legal risks associated with their settlement activities using an analytical and flexible approach to risks and risk management. In addition, a few of these systems may be required to meet the Lamfalussy Minimum Standards based on the Board's determination, for example, that such systems settle a high proportion of large-value interbank or other financial market transactions, generate very large liquidity exposures that have potentially systemic consequences, or generate systemic credit exposures relative to participants' financial capacity. In general, such systems are already subject to the Board's policy on Privately Operated Large-Dollar Multilateral Netting Systems, which is being integrated into the revised policy statement. The revised policy statement is not intended to alter the Board's policy with respect to these large-dollar systems. Further, the revised policy statement is not intended to alter approvals by the Board for specific clearinghouses to use the Federal Reserve Banks' Fedwire-based net settlement service. The revised policy statement is attached.

Summary only | Summary and policy statement (54 KB PDF)

1998 Banking and consumer regulatory policy